Do sustainable supply chain practices mitigate carbon emissions? The role of supplier environmental, social and governance training

Abstract

Over 75% of a firm's carbon footprint is attributed to logistics activities and transportation related to the acquisition, production, and distribution of materials and goods. Green supply chain management is considered a way to reduce carbon emissions and address climate change concerns. Accordingly, this study aims to investigate whether sustainable supply chain practices reduce carbon emissions and whether supplier environmental, social, and governance (ESG) training further enhances this effect, thereby reinforcing the negative association. We collected data for an international sample of manufacturing firms from Thomson Reuters Eikon for the period between 2002 and 2021 and ran a country–year fixed‐effects regression. To address endogeneity, we also utilized two‐stage least squares regression, propensity score matching, and entropy balancing. Our findings indicate that sustainable supply chain practices alleviate carbon emissions. Furthermore, we found that supplier ESG training strengthens this relationship, leading to even higher reductions in carbon emissions. Specifically, this training reinforces the negative association between sustainable supply chain practices and carbon emissions, resulting in a more pronounced decrease in carbon emissions. These results are robust to alternative proxies, samples, and endogeneity concerns. Our study highlights the importance of policy development and collaborative interorganizational actions among supply chain partners in developing solutions to climate change issues. As supply chain activities generate high levels of emissions and regulatory press is mounting, our findings may help firms take proactive actions for greener supply chain management and avoid regulatory sanctions. Additionally, we found that institutional strength stimulates firms' clean supply chain practices. Therefore, we advise policymakers to develop and implement necessary policies in less developed countries with weak public environmental regulations.